Wall St bankers' cash bonuses trimmed 9pc

Before the crisis, business and personal income tax collections from Wall St accounted for up to 20 per cent of state tax revenues, but has declined to about 13 per cent. Photo / Filephoto

The average Wall St banker was handed a cash bonus of US$128,530 for last year - about 9 per cent lower than a year ago, according to the official reckoning of the bonus season just ended.

The yearly report by the State Comptroller in New York shows the changing contours of Wall St's bonus culture after the credit crisis, as bankers get more of their annual pay deferred or in the form of shares.

The benefits from that part of their pay will be spread over several years, and could depend on the long-term performance of their bank and their own work. Although the size of the immediate cash bonus pool declined, Comptroller Thomas DiNapoli said, the overall value of 2010 bonuses again rose sharply, up 6 per cent on the previous year.

"Past practices rewarded short-term gains at the expense of long-term profitability," he said. "Now Wall St is changing its compensation practices in response to regulatory reforms adopted in the aftermath of the greatest financial meltdown since the Great Depression."

The office of the comptroller is responsible for New York state's finances. Before the crisis, business and personal income tax collections from Wall St accounted for up to 20 per cent of state tax revenues, but has declined to about 13 per cent.

"The industry's greater emphasis on deferred compensation will hold down tax collections this year," DiNapoli said, "but the state and New York City will benefit in future years when taxes are paid on this deferred compensation. A more stable and less volatile securities industry is in the best interests of Wall St, the city and the state".

The cash bonus pool for last year was US$20.8 billion, according to the comptroller's survey, down 8 per cent on the previous year and one-third lower than in 2007, the peak year. Payouts were spread among more employees, as the securities industry expanded again, having got itself back on its feet thanks to the government bailout and a resumption of more normal market activity.

At the end of last year, Wall St was hiring new workers at a rate of almost 1000 a month.

The size of bonuses - and the rise of deferred compensation - attracted union criticism. AFL-CIO president Richard Trumka said: "In state after state, public employees are being asked to pay for deficits that the Wall St financial crisis created."

- INDEPENDENT